European markets moved higher on Friday, with the pan-European STOXX 600 index closing 0.5% higher at 655.16 points, posting a modest weekly gain after declining for two consecutive weeks. According to The Economic Times, French stocks led gains across regional markets, with the CAC 40 firmed about 1% after sliding to a one-month low in the previous session. The recovery was driven by investors shifting focus to Federal Reserve Chair Kevin Warsh's speech at the Jackson Hole economic symposium for clues on inflation, interest rates and bond-market volatility. All STOXX 600 subsectors moved higher in early trading, with energy stocks, which have been among the weakest performers this week, firming 0.3%.
French banking stocks rebounded strongly, with Societe Generale, BNP Paribas and Credit Agricole rising between 1% and 1.9% after slumping in the prior session. As reported by The Economic Times, the banking stocks had suffered heavy losses in the previous session amid concerns about France's political and fiscal outlook ahead of next spring's presidential election. The recovery in French financial stocks provided crucial support to the broader market recovery, helping offset some of the negative sentiment from previous sessions.
Technology stocks emerged as the primary driver of market gains, rising 1.5% following strong results from U.S. chipmaker Nvidia. As reported by Devdiscourse, Nvidia projected a 70% increase in revenue for the next fiscal year, highlighting continued strong demand for artificial intelligence computing. Shares of AT&S, Technoprobe, and Computacenter climbed between 4.3% and 4.9%, reflecting investor optimism about AI-related spending and semiconductor demand. However, the latest developments show Nvidia shares slipped 1.3% as investors questioned the timing of revenue from its AI chip agreement with Alphabet's Google, despite the company raising its 2027 revenue forecast. According to The Economic Times, chip stocks gave back some of their gains after Nvidia's blockbuster forecast had revived optimism around the AI trade.
Among individual companies, Austrian construction group Strabag jumped 15.8%, hitting a record high, after the Austrian construction group lifted its annual outlook, making it one of the strongest performers in the region. According to The Economic Times, Belgium's Ackermans & Van Haaren gained 8.2% after reporting first-half results and upgrading its net profit growth outlook. The UK market showed strength in specific sectors, with Deutsche Bank and Heidelberg Materials both moving up by about 4.3% in the German market, while SAP dropped by about 3%. In the UK, Diploma, Halma, Howden Joinery Group, Intercontinental Hotels Group, Persimmon, Games Workshop, Airtel Africa, Spirax Group, IAG, Weir, Coca-Cola HBC, Aberdeen Group and JD Sports Fashion gained 1%-2.3%. Additionally, Gap shares climbed 15% after the company named industry veteran Michael Francis as Old Navy's new CEO and raised its annual profit forecast, while Ulta Beauty fell 6.1% after comparable sales growth slowed in the second quarter.
Investors are closely watching Federal Reserve Chair Kevin Warsh's Jackson Hole address for indications about the Federal Reserve's outlook on inflation, interest rates and recent volatility in bond markets. According to Reuters, the speech is expected to be a key market event as investors assess whether the Fed chair will provide more detailed guidance on monetary policy than his usual preference for limited signalling. Warsh's remarks at the Fed's annual gathering in Wyoming became the latest focus for investors looking for clues on the central bank's interest-rate path. Traders increased their bets on a September rate hike after Warsh said recent inflation data did not suggest a change in trend. His speech came at the end of a busy week for U.S. markets, with investors digesting earnings from corporate heavyweights including Nvidia and Salesforce as well as fresh economic data. The remarks also drew heightened attention after the U.S. Treasury moved to calm bond markets last week, adding to scrutiny around the direction of monetary policy. As reported by The Economic Times, markets also assessed Warsh's Jackson Hole speech, with the Fed chair reiterating his focus on bringing inflation back to the central bank's 2% target, while offering little guidance on future policy moves.
Fresh data underscored significant challenges facing France's economy, with second-quarter GDP growth revised down to flat from a preliminary 0.2% expansion, signalling weaker-than-expected momentum in the euro zone's second-largest economy. According to The Economic Times, Charlotte de Montpellier, senior economist at ING, said these figures suggest that the economy came very close to a technical recession in the first half of the year. She noted that additional fiscal consolidation measures will be needed in 2026 to keep the public deficit below 5%. "Without further measures, and with growth remaining so weak, the deficit could end up even higher than last year." Fitch is expected to review France's rating later in the day, a year after it downgraded the country to a record-low A+. The economic challenges have prompted traders to adjust expectations for European Central Bank interest rate shifts, with traders increasing their bets on ECB rate hikes in recent weeks as the U.S.-Israeli war with Iran has again pushed up energy prices, weighing on the STOXX 600.
